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invest nothing in retention. These normally smart entrepreneurs have deluded themselves into thinking that their product and services are so amazing and life-changing that people will continue to buy over and over again without prompting. So what lie do these same entrepreneurs tell themselves when they have 3.5 percent year-over- year revenue growth? Tens of thousands — maybe even hundreds of thousands — of dollars spent on marketing, and only 3.5 percent year-over-year revenue growth. If you’re a large retail chain, that isn’t bad, but for dentists, lawyers, financial advisors, or anyone in a service-based business, that is far from good. You MUST — starting today — have a customer retention budget. Use the budget to increase retention, and from there, upsell the existing customers. The longer a customer is with you, the greater the chance for a referral. Their customer lifetime value goes up, too. Done correctly, your retention piece can be used to upsell existing customers and close more prospects. Regardless of how you use it, you must have a retention budget. Getting Bored With Things That Make You Money As entrepreneurs, we are prone to getting bored, and that even happens with our marketing. Regardless of how it is working, we get bored with it and want to try something new. This is such a bad practice on so many levels. I understand wanting to try something new, but you NEVER cancel marketing that is working (even if it isn’t crushing it) to try an unproven new tactic. When people do this, they are basically saying “I hate money.” How many times have you tried a marketing program, only to have it not work out as promised or as quickly as promised? So stop canceling good marketing to chase unicorns. If you have traditionally slow sales months, you MUST do more, spend more, and market more, not less.
because if it doesn’t work, you are screwed. If you can’t afford the new marketing without killing the old marketing that is working, then you shouldn’t be starting the new campaign until you figure out how to pay for it. Not Investing Enough Money Into Marketing Is a Recipe for Disaster I was chatting with a dentist from the greater New York area a while ago, and he claimed to be getting patients with this one type of marketing for about $175 each, which is good in his area, because of all the competition. However, just because you hit a home run doesn’t mean you can expect to hit a home run every time you’re up to bat. In that area, it costs $250–$450 to get a new patient in the door. You will never grow if you’re not willing to invest a realistic amount per new customer. I’ve chatted with entrepreneurs who want to get 50 new customers per month, which should require a budget of at least $12,500, but currently, they only have a budget of $3,000 per month. I hate to break it to you, but you’re never going to hit your goal. If anything, the $12,500 per month you have devoted to marketing may not be enough, because as you scrape the low-hanging fruit, you often find you need to increase the amount you’re willing to pay to get a new customer. Feast or Famine Marketing This is the mistake I made last year. We had so much going on in the first half of the year (the feast) that I didn’t plan well enough for July, which is typically a slower month for us (the famine). In July, I need to do more marketing and even spend more money on marketing to make up for all the business I lose when people go on vacation and forget about their campaigns. But I was planning a vacation myself in July, and in turn, I ended up cutting marketing because I didn’t want to do the
work that was needed. Bad planning and a cut in the already planned marketing for July tanked the month. It was our worst month for new sales in nearly two years. You can’t allow a busy period to let you take your eye off the ball. If you have traditionally slow sales months, you MUST do more, spend more, and market more, not less. Cash Flow Issues Means More Marketing, Not Less This is the last of the bad ideas for today, but when you are having cash flow issues, canceling the pipeline that is bringing in more cash is just dumb. Of course the argument I always get when I say this to someone is that the marketing wasn’t working anyway. Well, if that was true, why didn’t you cancel it earlier? Typically, the entrepreneur doesn’t know if their marketing is working or not. All they know is they need money, so they cancel marketing to free up cash. That may help the problem this month, but it creates a new problem next month when no new customers show up. When times are hard, you need to reinvest more in marketing, not less. You must figure out how to close more sales, not get fewer leads. Real success and business growth doesn’t come from finding the latest marketing gimmick of the month, but rather from sticking with a bunch of small and rather boring things that work well, over and over again. It comes from creating marketing assets and business systems and
processes. I know it’s not as exciting as or fun as we all thought it was going to be, but it is what works.
If you want to try something new, create a budget and try it. Don’t kill a pipeline of incoming cash to drill for a hopefully more profitable pipeline,
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